Trapped ILS capital news

What is trapped collateral, or trapped ILS capital? When an insurance-linked securities (ILS) contract is seen to be at-risk of facing losses, sometimes the cedent can call for the collateral (or capital backing the ILS deal) to be trapped or frozen, so it remains available while loss development continues.

The collateral is trapped and unavailable for reinvesting into new ILS contracts, which can create a drag on ILS investment portfolios. The ILS capital can remain trapped for months or years until the ultimate loss associated with the contract is clear and a payout is deemed due or otherwise.



ILS capital expands in 2021, but up to 5% of reinsurance trapped: GC & AM Best

Alternative reinsurance capital levels in the global industry grew 3.7% over the course of 2021, outpacing the 2.7% growth of traditional reinsurance industry capital, according to the latest estimate from broker Guy Carpenter and rating agency AM Best. However, within the overall dedicated reinsurance sector capital estimate of $534 billion at read the full article →

CATCo retro fund gains again, NAVs now 148% & 231% higher than lows

The CATCo Reinsurance Opportunities Fund Ltd., the listed, retrocession focused insurance-linked securities (ILS) fund strategy managed by Markel CATCo Investment Management, has reported another increase in net asset value (NAV) after loss reserves saw more favourable development. The retrocessional reinsurance investment portfolio constructed by Markel’s CATCo Investment Management unit has experienced read the full article →

Deployable ILS capital may have fallen to $70-75bn, KBW estimates

Deployable (or not trapped and available to put to work) capital in the insurance-linked securities (ILS) sector is estimated to have fallen to around $70 billion to $75 billion, according to analysts at KBW. KBW's analyst team said in a recent report that they feel deployable ILS capital has declined further read the full article →

Aggregate retro capacity “extremely scarce” on lower ILS capital

Capacity to support aggregate retrocessional reinsurance renewals at 1/1 is "extremely scarce" according to analysts at KBW, who after a second day of meetings with Bermudian companies concluded that significant rate increases are going to be required for this segment of the market. The aggregate retrocession market was particularly impacted by read the full article →

Markel CATCo buyout support undertakings extended to end of February 2022

As the proposal of a process to buyout investors in the Markel CATCo Investment Management retrocessional reinsurance investment funds has been drawn out by legal appearances and is now waiting for a court decision to proceed, the investment manager has extended the expiry date of the support undertakings it received read the full article →

Renewal optimism rises, as market delays on lack of retro & trapped ILS capital

Optimism over reinsurance renewal rate increases is said to be rising, as the market deals with a significantly delayed renewal timeline, for which a lack of aggregate retrocession capacity and trapped insurance-linked securities (ILS) capital are two of the drivers. Analysts at KBW spoke with a number of Bermudian reinsurance firms read the full article →

Markel CATCo says court decision on buyout hoped for in January

Progress in the buyout of investors in the Markel CATCo Investment Management retrocessional reinsurance investment funds is unlikely to be made until next year now, as the investment manager said a court decision is unlikely to come until January 22nd 2022. The investment manager said that a convening hearing in respect read the full article →

Attitudes on pricing are “bullish”, with capacity a factor: Flandro, HX

Attitudes on pricing are generally seen as "bullish" as the January reinsurance renewals approach, with capacity availability and risk appetite seen as key factors, according to Head of Analytics at Howden unit HX, David Flandro. Another factor set to drive rates and market conditions is trapped collateral in the insurance-linked securities read the full article →

Markel CATCo to “vigorously defend” investor challenges

Markel CATCo Investment Management acknowledged the delay to the buyout process for its retrocessional reinsurance investment funds this morning, but said that any challenges from investors would be vigorously defended against. We reported yesterday that the buy-out process for its retrocessional reinsurance investment funds was set to drag on, after a read the full article →

Markel CATCo buyout process facing challenges as court calls for more info

Activity surrounding the buyout terms proposed to investors in the Markel CATCo Investment Management retrocessional reinsurance investment funds looks set to drag on, after a court appearance in Bermuda ended with Markel agreeing to provide additional information to creditors, we understand. The civil and commercial Supreme Court hearing in Bermuda yesterday read the full article →